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PRACTICES

Construction Litigation

February 27, 2018

We have successfully handled a number of construction litigation cases with big value and technically complication. When our lawyers engage in a construction litigation, we don’t just focus on legal perspective of the case, but we also put a lot of effort to grip the technical aspect of the construction itself to bring positive outcome. We fully obtain the specific knowledge of industry and even detailed technique of the case. Our lawyers are always ready to be employed at client’s office or travel to site, to work out all the details concerning the matter. We also work with the other parties to get other viewpoints on the matter, and to generate a thoroughly idea of the case.

Construction litigation can take all forms of disputes. There are cases where the construction has been completed but final payment cannot be settled, or the construction is still in its progress and participants dispute about financing and use of resources, or the construction has just commenced and parties argue over whose responsibility is violated. Whichever party we represent, we make sure that party will get the best result for client’s expectation.

Recently, with economic development and growing investment in Vietnam, more construction activities are taking place in big cities and industrial zones. Contractors, investors and owners, when initiating a construction project, should have been immensely careful in foreseeing all legal risks to prepare for any litigation issue later. Nevertheless, there are always ways to deal with everything. Our litigators are skillful strategists, who can generate, invent, and implement very innovative and effective ideas to prevent at the beginning or even settle the dispute. Litigation can cost a lot of time and effort, but when we represent our client, we make sure the outcome is in our client’s favor.

Recent Representation:

IN 2018

• We have been assisting an employer (owner) in the claims arising in connection with the quality of the work derived from the terms of subsisting contract. The allegations are defects, incomplete work and work which does not comply with the stipulations of the contract specifications and drawings. In this case, the primary defendant is the contractor; but we also bring proceedings against other parties who have contributed to the default in workmanship. The disputed value is USD650,000.

• We have also acted on behalf of a contractor in the payment claim. The claim is directed against the employer for payment of a reasonable remuneration by way of quantum meruit for services rendered pursuant to a contract which had never been validly executed. In this case, we have proved that although there is no contract, the employer did purportedly give the instructions for the work to be carried out.

IN 2017

• In a construction dispute between our client and a sub-contractor in relation to a water supply and sanitation project, due to the large scale of the construction project, normal lawsuit at the First-Instance Court would cost a lot of time for our client. Therefore, instead of filing a lawsuit against the sub-contractor, we advise our client to file the lawsuit against the commercial bank to claim payment under the bank guarantee for advance payment (with the amount of over EUR700,000). This allows our client to quickly claim the money and completely reverse the positions of the parties, i.e. the sub-contractor has to file the lawsuit and suffer from the time-consuming litigation proceedings and expensive advance litigation fee to claim back the bank guarantee payment from our client. Then, our client can defend such lawsuit without any urgency because the money was already obtained.

• In relation to the construction of a restaurant in Ho Chi Minh City, we represent a restaurant owner against a lawsuit from the contractor. The contractor claims the payment under the ground that they have finished the works required under the contract. However, after closely examining the construction site and relating documents, we show to the contractor and the First-Instance Court many important facts that were intentionally left out by the contractor such as the works have many serious defects (which requires destruction and re-construction to rectify) and the contractor did make many mistakes in the whole construction process that eventually caused serious delay to our client’s business. Together with the presentation of facts, we also submit many evidence to demonstrate the violations of the contractor, including records and pictures taken by the bailiff (the agency being authorized by the law to record facts and such records are unchallengeable at the First-Instance Court).

IN 2016

• The opposition (a Mechanical Engineering and Construction Limited Liability Company) sued our client for not paying 5% of contract value (over USD4,000,000 in total) due to our blame for their unfinished maintenance tasks. With well-established tactics in analyzing the lawsuit, we figured out this claim was clearly implausible due to the opposition’s two disastrous mistakes.

Firstly, their lawyers seemed not to understand the arbitration process that led to their over-claim at the maximum amount (over USD590,000) without consideration of the cost they might pay. Secondly, the opposition submitted tons of documents to the arbitration (Vietnam International Arbitration Center) without pre-checking the possibly negative impacts.

Being fully aware of our client’s context (lack of written documents or trusted evidence), we effectively navigated the “playground” at our own advantages by utilizing the opposition’s documents as a trusted verification for our arguments. Also, on counter-claiming the opposition, we deeply understood every step in an arbitration procedure that we decided to selectively claim them only for their bad works with an aim to our definite success at the minimum legal costs. We did successfully represent the client in disclaiming USD270,000 in the total amount of USD590,000 claimed by the opposition, i.e. the final amount in the judgement was USD320,000 for the opposition.

• Our client’s contractor filed a lawsuit at the First-Instance Court to claim the remaining construction payment and interest under a contract valued over USD2,700,000. The contractor requests the payment of approximately USD640,000. When defending our client, we have fully reviewed the works performed by the contractor and found that there are some works (valued at around USD240,000) was not approved by our client prior to the construction and as a result, should not be entitled to payment from our client. Furthermore, we file a counter-claim against the contractor for delay in construction and request the payment of compensation and penalty of over USD1,200,000.

• A firm of consulting engineers was employed to design and supervise the structural works for the construction of a hotel (our client is the developer). After completing the structural design, it was found that the structure was under-designed. The engineers corrected the design on the structural drawings and submitted the corrected drawings to the relevant building authorities. Unfortunately, the uncorrected drawings were issued to the builders and, as a result, the works as built developed serious structural problems. These required remedial and strengthening works and delayed the completion of the project by 101 days. We have assist our client in claiming all the damages including expenses for remedial works, interest on various loans incurred by our client during the period of delay as well as loss of rental income on the hotel. The First-Instance Court allowed the claim for expenses for remedial works and interest but rejected the claim for loss of rental income in respect of the hotel. On appeal, the Appeal Court upheld the First-Instance Court’s judgement of damages for most of the claim, but set aside the award of interest. The total dispute value was USD2,500,000.

• We represented a main contractor for a commercial building who had entered into a contract to secure the supply of ready mixed concrete for the project. Some months after the parties had executed the contract, the supplier suspended the supply of the ready mixed concrete. The supplier relied on a clause in the contract which provided that “in the event of any circumstances constituting force majeure, which is defined as Act of God, or due to any cause beyond the supplier’s control, such as market raw material shortages, unforeseen plant breakdowns or labor disputes, the duty of the affected party to perform its obligations shall be suspended or limited until such circumstances ceases.” The Appeal Court held that there can be no general rule as to what constitutes a situation of force majeure: whether such a situation arises and where it does arise, the rights and obligations that follow, would all depend on what the parties had provided in their contract. The expression force majeure is likely to be restricted to supervening events which arise without the fault of either party and for which neither of them has undertaken responsibility. In this case, the Appeal Court was of the view that the particular force majeure clause would not have excused the supplier from liability because the supplier could not show that the shortage or raw materials or the plant breakdowns were beyond its control.

IN 2015

• We represented a supplier against the main contractors were employed for the construction of a water treatment works. As originally designed, the works included the installation of pre-cast concrete drainage components which were manufactured off-site. The main contractors duly placed an order with a supplier. After the supplier had manufactured about a quarter of the total quantity of the components, there was a change of specification in the main contract and the engineer gave instructions for this part of the works to be omitted. The supplier claimed for loss of profit on the components which were not delivered and the cost of the mold constructed to manufacture the order. The main contractor passed the claim to the owners who paid for the cost of the mold but refused to pay for the loss of the profit. The Appeal Court held that fair valuation must necessarily include compensating the main contractor for a loss of profit payment made to the supplier in respect of the cancellation of the order consequent upon the omission.